Tricare remains a valuable health insurance option that you don’t want to lose. However, vigilance is crucial to ensure you don't inadvertently do so. Currently, most Active and Retired Senior Military Officers and NCOs are covered by Active Duty/Retiree Tricare. Yet, upon reaching the age of 65, a transition to Tricare for Life (TFL) becomes mandatory, regardless of personal preference.
Is Medicare Mandatory for Military Retirees?
Understanding how TFL operates is pivotal. If you qualify for MEDICARE, your Retiree Tricare coverage ceases. To secure TFL, you must enroll in MEDICARE Parts A and B, and this is where potential pitfalls lie.
If Not Careful, Military Retirees Can Lose Tricare Coverage
Here are some scenarios where individuals may encounter complications:
- Continuing Employment Beyond Age 65: If you choose to work past age 65, your HR department may suggest that your workplace insurance suffices, eliminating the need to enroll in MEDICARE. This misconception can be costly. To preserve Tricare coverage in the form of TFL, MEDICARE enrollment is obligatory, even when employed.
- Confusion Between MEDICARE and Social Security Full Retirement Age (FRA): It's common for many to attain their Social Security Full Retirement Age (typically 66 or 67) after age 65. However, your MEDICARE eligibility age remains 65. Confusing these two can lead to a lack of insurance coverage, as you won't have MEDICARE, and consequently, TFL coverage. If you aren't signed up for Social Security, you'll need to pay your MEDICARE premiums manually.
- Qualifying for Social Security Disability: Generally, individuals receiving Social Security Disability Benefits qualify for MEDICARE 25 months after starting these benefits. Once eligible for MEDICARE, you must enroll in and pay for both Medicare Part A and Part B to avoid losing TRICARE coverage, irrespective of your age.
- Relocating Overseas: MEDICARE typically does not cover individuals residing overseas, except for emergencies. Opting to cancel MEDICARE results in the loss of TRICARE coverage. Even if you live abroad, you must maintain and pay for Medicare Parts A and B.
How Much Does Tricare for Life Cost?
It's essential to clarify the MEDICARE coverage structure. Medicare Part A is automatic, with no premium costs beyond what you contributed during your working years. In contrast, Medicare Part B requires payment, with the premium determined by your Adjusted Gross Income (AGI) from two years prior. As of 2023, the premium amounts are as follows:
- AGI Less than $185,000 / $92,500 (Married/Single): $135.50 per month
- AGI $185,000 - $230,000 / $92,501 - $115,000 (Married/Single): $189.60 per month
- AGI $230,001 - $340,000 / $115,001 - $170,000 (Married/Single): $270.60 per month
- AGI $340,001 - $454,000 / $170,001 - $227,000 (Married/Single): $351.70 per month
- AGI Greater than $454,000 / $227,000 (Married/Single): $432.80 per month
Significant employment income or large Required Minimum Distributions (RMDs) from Qualified Accounts/Traditional IRAs can propel you into higher income brackets, necessitating consideration of withdrawals or conversions to Roth accounts between prior to age 63.
Military Finances are Different
For expert guidance on navigating your military financial and insurance matters, C.L. Sheldon is here to assist you. If you require assistance in understanding TFL, MEDICARE, and strategies to mitigate increased MEDICARE premiums, please don't hesitate to reach out to us. You can schedule a free initial consultation using the button below.
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